BAT - Brait SE - Acquisition by the company of 19% of Iceland Food Group

BAT - Brait SE - Acquisition by the company of 19% of Iceland Food Group        
Limited ("Iceland") and withdrawal of cautionary announcement                   
BRAIT SE                                                                        
(Registered in Malta as a European Company)                                     
(Registration No.SE1)                                                           
Share code: BAT & ISIN: LU0011857645                                            
("Brait" or "the Company")                                                      
ACQUISITION BY THE COMPANY OF 19% OF ICELAND FOOD GROUP LIMITED ("ICELAND")     
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT                                       
1.   INTRODUCTION                                                               
    Further to the cautionary announcement dated 17th February 2012,            
shareholders are advised that the Company has entered into a transaction    
    alongside the founder and senior management to acquire the entire issued    
    share capital of Iceland. Brait invested GBP80 million to acquire a 19%     
    stake ("the Acquisition").                                                  
2.   THE ACQUISITION                                                            
    Rationale                                                                   
    Established in 1970 by Malcolm Walker and his business partner with just    
    GBP60 of capital, Iceland now operates over 700 stores across the UK and    
reported year-end sales of GBP2.4bn to March 2011. The group, which         
    consists of value food retailer Iceland Foods, discount frozen food         
    retailer Cooltrade and frozen food exporter ITEX, continues to invest       
    heavily in frozen food innovation, launching over 200 new products in the   
past year alone.                                                            
    Iceland`s business model centres on a frozen-led grocery proposition,       
    supported by chilled and ambient (grocery) categories. The management       
    team stresses that value, not price, is the key attraction to its           
customers, and whilst Iceland is most commonly synonymous with frozen       
    foods, the overall offering is family orientated with a heavy focus on      
    value for money. By leveraging its scale and private label offering in      
    its core categories Iceland is able to offer customers consistently low     
prices.                                                                     
    This Acquisition presents Brait with an opportunity to partner an           
    entrepreneurial management team in a successful business exposed to a       
    strong performing segment of the market alongside international market      
leading retail investor groups.                                             
    A more detailed overview of the business will be presented at the           
    Company`s upcoming results presentation.                                    
    Terms of the Acquisition                                                    
The effective date of the Acquisition is 9 March 2012.  This Acquisition    
    values the business at GBP1.45 billion before transaction costs and is      
    based on a sustainable historic EBITDA of GBP230 million, implying an       
    entry multiple of 6.3x.                                                     
The consideration                                                           
    The buyout is backed by a GBP860 million all-senior debt package funded     
    by Credit Suisse, Deutsche Bank, HSBC, Nomura and RBS, as well as a         
    GBP250 million vendor loan note.  The equity funding has been provided by   
existing senior management acquiring 43%, with the remaining equity         
    acquired in equal proportions by Brait, Lord Kirkham, founder of DFS        
    Furniture Group, and The Landmark Group, a leading Middle Eastern retail    
    group.                                                                      
3.   CONDITIONS PRECEDENT                                                       
    There are no conditions precedent to concluding the Acquisition.            
4.   WITHDRAWAL OF CAUTIONARY                                                   
    As all the material Acquisition information is contained herein, caution    
is no longer required to be exercised by shareholders when dealing in       
    their Brait securities.                                                     
Sandton                                                                         
9 March 2012                                                                    
Merchant bank and sponsor                                                       
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Date: 09/03/2012 17:00:04 Supplied by www.sharenet.co.za                     
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